Newsroom / The Dynamics of Change: A Conversation with Constance Helfat

The Dynamics of Change: A Conversation with Constance Helfat

By Catherine MelocikPublished Mar 26, 2013

Some companies manage to profitably reinvent themselves over and over again—witness the continued success at IBM and Apple. Yet for every company that succeeds in growing through transformation, there are many more that fail to adapt. Professor Constance Helfat researches just what qualities help companies thrive in an era of rapid technological change.

What research are you concentrating on now?

I’m currently focusing on dynamic capabilities—specific capabilities that enable firms to adapt to and promote change. One example is research and development—a capability that enables firms to adapt their products and processes as changes in technology and consumer demand come along, and as competitors change their strategies. Another is the capability to acquire other firms—there’s a whole range of reasons why firms might do acquisitions strategically. Sometimes firms like Apple use acquisitions to buy technology a lot more quickly than they could create it themselves; the same is true of Cisco.

How do firms develop dynamic capabilities?

Experience helps. But firms need to learn from experience and put in place regular procedures and policies so they don’t reinvent the wheel each time and make the same mistakes. With acquisitions, that includes procedures for selecting acquisitions, executing them, and integrating them. Firms that do acquisitions on a more regular basis are generally better at it because they already have these capabilities in place.

How much does that have to do with the leadership of a particular firm?

Leadership has a lot to do with it. Generally leadership has an important role in which types of dynamic capabilities firms try to develop and whether firms manage to implement the necessary policies and procedures. As a rule, that push is going to come from the top.

You’ve talked before about earlier research on the resource-based view of firms—how internal assets and capabilities affect a firm’s success—and how recent research is focusing more on dynamic capabilities. Would you say that’s still true?

The resource-based view of the firm is still important. It’s become one of the standard areas of research in the field of strategy. Dynamic capabilities has generated a lot of interest—there’s been a quite a bit of theoretical work, and now we’re seeing more empirical research, both qualitative and quantitative studies. We need the empirical work to be able to tell what’s actually going on, what works and what doesn’t.

You teach an elective that focuses on Apple—is that the ultimate company to study when it comes to dynamic capabilities?

I’ve been discussing Apple in my courses since the mid- to late ’90s. It’s an intrinsically interesting company—not just because it’s usually doing something new, but because it’s usually doing something in a different way. It’s not that Apple is a technological leader; instead, it does a masterful job of marketing technologically based products, and it does a masterful job of developing features that consumers value. It’s really quite amazing.

Apple has a reputation as an unusual company, but if you analyze the company from a strategy perspective, you can see that in many respects, it does things that make absolutely perfect strategic sense.

Are there any specific companies besides Apple that you find particularly intriguing to look at?

IBM’s interesting—they’ve reinvented themselves a few times. One thing that’s particularly interesting about both Apple and IBM is related to some of my research on how prior experience and history affect what a company is capable of doing and what it chooses to do. The technical term for this is ‘path dependence’, which means that a company’s prior history constrains its options for the future. It’s very difficult for companies to completely change what they do. And when path dependence is extremely high, companies just keep heading down the same path—the environment changes and the firms don’t. This path dependence hasn’t been as strong for Apple and IBM. They’ve been able to go into new businesses quite successfully and reinvent themselves, but even so, the way they’ve reinvented themselves has its seeds in their past history.

You’ve been at Tuck since 1998. How have the topics taught in strategy changed in that time?

There are some topics in strategy that we teach now that we didn’t used to teach because the ideas and concepts were new— disruptive technology is one example. That was a relatively new idea 15 years ago; now it’s standard teaching material in some of the electives, and it’s sometimes taught in the core. We also teach more about platform markets, which have become of particular interest because of the Internet, where many companies serve as platforms that connect buyers and sellers. Strategy is also starting to incorporate more aspects of cognition: the way people process and interpret information and how that affects corporate strategies. I’d also say the resource-based view wasn’t necessarily core material when I came to Tuck, but it is now.

How do these topics become part of the curriculum?

Some research can be incorporated quickly, but much of the research on what is now foundational started years ago. I think sometimes people might wonder why faculty do academic research; they might wonder why this is useful in a business school. Part of the answer is that this makes a huge difference to what we’re able to teach 5, 10, or 20 years down the road. We’re doing research that will become relevant, because we’re studying business firms in a business environment. But academic research takes a while. It takes a while to do the studies and it takes a while to do enough studies that we know what the regularities are.

The world changes, and most people think it’s changing more quickly than ever. But if we don’t do the research now, how can we inform managers, and what are we going to teach our students in the future?

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Very enlightening insights, especially ones into resource-based view and dynamic capabilities. Actually, that’s one of problems that China’s major SOEs are facing. They recognize how important dynamic capabilities are for their further development. However, since old concept of resource-based view is rooted, it’s hard for them to change. At least, this change takes time. As for Apple,I have a big concern of its oranization structure, which can guarantee efficient implementation of innovation. However, this structure is too centralized. It’s flexible, but not reliable enough. I am wondering could it be better if there is an counterpart to balance?